Cable's Q3: Internet Strong, Video a Mixed Bag

Quarterly financials from cable operators showed continued emphasis on WiFi and wireless in general, assimilation due to mergers, and adjustment to the brave new world of over-the-top (OTT) video. News regarding video subscribership was mixed, with some showing gains and some losses, but many reiterated that broadband is strong and leading growth.

Here are some of the quarterly highlights:

Comcast (NASDAQ:CMCSA)

• 32,000 video customers were added during the third quarter; 170,000 video customers were added last 12 months.
• Netflix has been integrated into the X1 platform.
• X1 customers have three times higher activations of DVRs and spend twice as much on pay-per-view, compared to non-X1 customers
• 50% of subscribers use TV Everywhere, up from 30% last year. They view 10 hours monthly on average. Comcast has 130 streaming channels and 40,000+ VOD selections.
• Going to all IP-based video solution in "let's just call it" a couple years. Product is in the lab.
• Xi5 and Xi6 are "coming out." These WiFi boxes are attached to the TV via HDMI without cables in the room. Trying to get onboarding down to two minutes.

Charter Communications (NASDAQ:CHTR)

• Late September started deployment of marketing strategy in Time Warner Cable footprint, including Texas and California. This involves new pricing and packaging and rebranding of services as Spectrum.
• This month, Spectrum will be rolled out in New York City and Florida; all Time Warner Cable and Bright House markets expected to be completed by spring of next year.
• By end of year, the company expects to have branded more than 50% of service area as Spectrum.
• 47,000 residential video customers were lost in the third quarter, driven by losses at TWC.
• Charter expects to trigger an MVNO with Verizon and is in fruitful discussions regarding transferability from TWC to a new owner. Charter has also asked the SEC for right to experiment with millimeter wave technologies in several markets.

GCI (NASDAQ:GNCMA)

• The FCC has adopted an Alaska plan for high-cost USF funding to provide funding to maintain and improve broadband communications in rural Alaska.
• GCI continues to receive $55 million of rural support payments annually. This is expected to remain unchanged for 10 years subject to performance commitments and review at five years.
• The $11 million in annual urban support will decline to $7 million in 2017, $4 million in 2018 and then be eliminated.
• GCI is simplifying its billing systems. the MSO eliminated three billing systems this year and is down to less than 1,000 subscribers on the fourth and last one that will be eliminated this year. The eliminations are expected to save $5 million in payment to vendors.
• Cable modem subscribers were up 2,700 over the third quarter of 2015. GCI has also increased speeds without increasing price. Its lowest speed in urban areas is 50 Mbps.

Cable ONE (NYSE:CABO)

• Video subs were down 51,000 in Q3 this year, compared to 60,000 in Q2, 70,000 in Q1, and 86,000 in Q4 2015.
• The company implemented a "harvest" video strategy four years ago. This caused "precipitous" declines, like dropping Viacom and an entire door-to-door sales force. Shocks are no longer happening and are the reason for the downward trajectory.
• Residential data revenues increased by almost 19%, and business revenues increased by more than 13%. Data and business revenues comprise almost 55% of total revenues.

Shaw Communications (TSX:SJR.B)

• The company acquired Wind this year, which provided a "critical piece to our converged network" and growth strategy. Customer demand for mobile products continues to increase.
• Growth of wireless, BNS, and BIS services delivered "solid" results.
• Shaw solidified partnerships with Comcast, Cisco, Nokia and Broadsoft.
• The company launched FreeRange, a TV e-application.
• Shaw is working closely with Comcast to deploy X1 across its footprint, which is expected to be done throughout FY2017.
• WideOpen Internet 50 was launched in August and is available to 90% of Shaw's footprint.